Company tax ‘under pressure’

IRELAND’S company tax system will come under renewed pressure from France and Germany at the EU summit later this month.

Both countries say that harmonising the way corporation tax is assessed and introducing a financial transaction tax on the banking industry will help generate growth and jobs in the EU.

German chancellor Angela Merkel and French president Nicolas Sarkozy have prepared a document, Ways out of the crisis — strengthen growth now, for the summit.

Taoiseach Enda Kenny will be under severe pressure at the meeting as he seeks also to ensure that the fiscal treaty does not force a referendum on Ireland or limit the country’s access to further funds from the bail-out fund, the EFSF.

The document says governments should “accelerate the process of tax co-ordination in order to foster growth, removing obstacles to the functioning of the single market and preventing tax abuse and harmful tax practices”.

Finance Minister Michael Noonan reiterated yesterday in Germany Ireland’s position that a financial transaction tax would only work if it was global. This tax would “give us great difficulty because business would be transferred from Dublin to London”.

In a speech to a group of investors, he said the country’s 12.5% corporation tax was central to Ireland’s attraction for investors and its retention was crucial to economic development. Mr Noonan said that Ireland supports the need for fiscal discipline “as long as there is equal and complementary focus on fostering growth and creating jobs”.

The document also suggests ways to encourage growth including the creation of a fund for growth and competitiveness for bailout countries.